The Gold-Backed BRICS Currency and the Danger to the Fiat Dollar

August 16, 2023
TFR Staff


In the realm of global finance and economics, the potential introduction of a gold-backed currency by the BRICS countries—Brazil, Russia, India, China, and South Africa—has gained attention as a potential challenge to the established fiat dollar system. This proposal envisions a currency tied to physical gold, to provide stability and value preservation in contrast to the perceived volatility of fiat currencies. While the idea of a gold-backed BRICS currency has its merits, it also raises concerns about the potential dangers it could pose to the fiat dollar, which has been the bedrock of the international monetary system for decades.

The Appeal of a Gold-Backed Currency:

The appeal of a gold-backed currency lies in its historical association with stability and intrinsic value. Gold has been used as a store of value for centuries, and a currency linked to gold could theoretically provide a hedge against inflation, currency devaluation, and economic uncertainty. The proponents of a gold-backed BRICS currency argue that it could provide a more solid foundation for trade and investment. Additionally, it could reduce the risk of speculative bubbles and discourage reckless monetary policies that can lead to economic instability.

Furthermore, a gold-backed currency could potentially promote trust and confidence in a multipolar global economy. As the BRICS countries continue to rise as economic powerhouses, a gold-backed currency could underscore their commitment to responsible financial management and establish them as reliable partners in the international economic system.

The Danger to the Fiat Dollar:

The concept of a gold-backed currency raises concerns about the dangers it could pose to the fiat dollar system, which has been the cornerstone of the global financial order since the end of the gold standard in the early 1970s.

One immediate concern is the potential impact on the US dollar’s status as the world’s primary reserve currency. Currently, the dollar enjoys significant demand worldwide due to its role as a global reserve currency, facilitating international trade and finance. If a gold-backed BRICS currency gained traction, it could attract demand away from the dollar, potentially diminishing its role in the global monetary system. This shift could reduce the United States’ economic influence and its ability to borrow at favorable terms, thereby affecting its fiscal management and potentially increasing borrowing costs. This threat grows more real the higher the US national debt grows, which currently sits at $32 trillion.

Moreover, the transition to a gold-backed BRICS currency could lead to significant exchange rate fluctuations and currency imbalances. As countries adjust to the new currency landscape, the value of their own currencies could experience volatility, potentially resulting in trade disruptions and economic instability. The coordination required to manage such a transition could prove challenging, and the ensuing uncertainty could reverberate throughout the global economy.

Another potential danger is the disruption to the current financial infrastructure. The fiat dollar system is deeply integrated into global financial markets, trade agreements, and investment instruments. A shift to a gold-backed currency could entail revisiting and reworking these agreements and structures, leading to market turmoil and legal disputes. Such disruptions could undermine investor confidence and lead to economic uncertainty, potentially harming the prospects for economic growth. 


In conclusion, the reaction of BRICS to the fiat dollar by creating a gold-backed currency should concern all Americans. A move away from the fiat, petro-dollar would spell economic devastation to the US economy. Quality of living would be dramatically reduced and cause pain for US families for years until we would be able to recover. 

With the global economic turmoil reaching all-time highs, it’s time for lawmakers to start to consider abandoning the federal reserve fiat system before it is too late. Sound money with objective value is the cornerstone of a free market and the US should acknowledge its mistake and the resulting inflation caused by the move away from gold back dollars. We call for lawmakers to propose legislation to transition the US system back to sound money.

Texans for Fiscal Responsibility relies on the support of private donors across the Lone Star State in order to promote fiscal responsibility and pro-taxpayer government in Texas. Please consider supporting our efforts! Thank you!

Get The Fiscal Note, our free weekly roll-up on all the current events that could impact your wallet. Subscribe today!